How Can Multilateral Development Banks Better Support Green Energy Transition and Financing in the Global South?
(2022-2024) supported by Centre for Global Development
PEP supported an evidence-based analysis in Pakistan and South Africa on how Multilateral Development Bank (MDB) reforms could support green transitions and financing in the Global South. Drawing on modeling techniques and stakeholder engagement, local PEP researchers made specific policy recommendations on how MDBs could also support necessary policy reforms and facilitate compliance measures while contributing to financing the transition. The findings from the study address an urgent need as Pakistan has set an ambitious target of generating 30% of its electricity from renewable sources by 2030, while South Africa aims to achieve significant emission reductions through the decarbonization of the power sector. The findings highlight how MDBs can not only finance green energy infrastructure but also play a vital role in facilitating a just transition.
Find out more about the study in the Executive Director’s LinkedIn Newsletter – MDBs can address the missed opportunity of financing green energy transition in the Global South – and social media posts for Pakistan and South Africa summarizing the key findings.
Find out more about findings from each country below.
Pakistan is facing a severe energy crisis that threatens its economic stability and environmental sustainability. Transitioning from coal-based electricity to solar energy by 2030 could significantly boost economic growth and reduce greenhouse gas emissions. A team of researchers found that with an estimated $8 billion investment, Pakistan could increase its GDP by over 11% and reduce CO₂ emissions by 5–10% across various fossil fuel sectors. Multilateral Development Banks (MDBs) can play a critical role in this transformation by providing green loans, technical assistance, and policy support to facilitate the transition.
South Africa’s heavy reliance on coal has made it one of the world’s largest CO₂ emitters, posing significant environmental and health challenges. Despite government efforts, financial constraints and operational inefficiencies at Eskom hinder progress toward renewable energy adoption. Multilateral Development Banks (MDBs) are essential partners in addressing these barriers.
A study by PEP researchers highlights that MDB concessional financing, coupled with governance reforms at Eskom and economic diversification initiatives in coal-dependent regions, can drive South Africa’s green energy transition. These efforts will not only reduce CO₂ emissions but also create new economic opportunities and promote regional stability.
